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by: KaitiBell

NotesforFinancialAccountingWeekOne.pdf ACTG 251 - C01

Marketplace > Clarion University of Pennsylvania > Accounting > ACTG 251 - C01 > NotesforFinancialAccountingWeekOne pdf
GPA 3.75
Financial Actg
Thomas Oliver

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Hi everyone! Didn't catch all of this week's notes or weren't able to make it to class? Here are this weeks financial accounting notes! Enjoy!
Financial Actg
Thomas Oliver
Class Notes
Accounting, financial accounting, accounting 251, financial reporting
25 ?




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This 5 page Class Notes was uploaded by KaitiBell on Saturday August 29, 2015. The Class Notes belongs to ACTG 251 - C01 at Clarion University of Pennsylvania taught by Thomas Oliver in Summer 2015. Since its upload, it has received 32 views. For similar materials see Financial Actg in Accounting at Clarion University of Pennsylvania.

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Date Created: 08/29/15
Notes for Financial Accounting Kaiti Bell For Dr Thomas Oliver August 25 2015 Introduction to Accounting 0 Accounting is the language of business a complete information system 0 Gathers information to measure business activities 0 Processes information into reports which are then given to decision makers A decision is made to take action a business Results of business transaction are recorded to provide decision makers A transaction with more info to make more decisions Business transactions occur Who Uses Accounting Information 1 The Individual 0 Manager personal finances 0 Make purchasing decisions 0 Construct a budget 2 Investors and Creditors o Investors want to know how much they can make off of investment 0 Creditors want to know when they can expect money and interest to be returned 3 Regulatory Bodies Government Agencies 0 Internal Revenue Service IRS enforces all tax laws 0 Securities and Exchange Commission SEC body that requires public companies to provide financial statements 4 Non Profits 0 Similar needs to a regular business financial statements and tracking to keep operations running The Two Kinds of Accounting Financial for external decision makers Managerial for internal decision makers 0 Provides information for investors creditors government agencies 0 Governed by a strict standard of rules 0 Used to create budgets 0 Used to forecast and project Accounting Concepts and Assumptions 0 Generally Accepted Accounting Principles GAAP serve as a guideline for standards 0 The Financial Accounting Standards Board FASB sets the GAAP 0 However the SEC can overrule the FASB Accounting Objectives Grab your reader s attention with a great quote from the document or use this space to emphasize a key point To place this text box anywhere on the page just drag it Provide financial info about reporting entity to users investors creditors etc to make decisions about providing resources Relevance Capable of making a difference to user 0 Predict or confirm value 0 Materiality size amount of money involved Comparability Must be able to compare info with other entities Verifiability Ability to be checked for accuracy and completeness Faithful Representation Information has to be neutral complete and error free Reflects economic substance truthful Must be reliable Timeliness Available in a timeframe make the decision that helps Understandability If you can t understand it how is it useful Cost Constraint Benefit to user should exceed the cost of obtaining information August 27 2015 Assumptions and Principles Entity Assumption accounts for business enterprise as separate economic unit Continuity GoingConcern Assumption entity will continue to exist indefinitely unless we have info to the contrary Historical Cost Principle all assets recorded at actual cost Stable Monetary Unit Assumption effect of inflation is ignored if the currency s monetary value is relatively stable International Financial Reporting Standards IFRS Developed by International Accounting Standards Board IASB Used to regulate standards across the globe and makes comparison possible SEC is actually considering adopting these standards However IFRS is not that different from what we have now Chapter 1 Financial Statements Accounting Equation Assets Liabilities Owner s Equity All financial statements are based on this equation Assets are economic resources that have expected future benefit Liabilities are what is owed to outsiders expected future sacrifice payment Owner s Equity is what owners ownwhat is owed to them Can also be written as Assets Liabilities Owner s Equity or Assets Liabilities Stockholder s Equity or Assets Liabilities Paid in Capital Retained Earnings Paid in Capital is what the stockholders invest Retained Earnings is the amount earned and kept for future use Revenues are money inflows from production Expenses are money outflows from operation Net IncomeLoss Revenue Expenses Dividends Net income or loss Revenues Expenses Net Income Sta rt of Period 1 Retained earnings Net IncomeLoss beginning balance Dividends Evaluate Financial Statements measuring performance End of Period Retained Earnings Ending Balance 0 Income Statement leads to a statement of Retained Earnings then a balance sheet and finally a statement of cash flows 0 The information on each statement is used to complete the next A Income Statement 0 Aka the statement of operations 0 Reports revenues and gains expense and loss bottom line income for period B Retained Earnings o Portion of Net Income reinvested into business 0 Income increases it losses decrease it o Declaring dividends are optional C Balance Sheet 0 Reports assets liabilities and owner s equity 0 Considered a snapshot of that particular moment in the business history 1 Current Assets 0 Cash and cash equivalents 0 Short term investments 0 Accounts Receivable 0 Inventory 0 Prepaid expenses 2 Long Term Assets 0 Property and Equipment 0 Accumulated Depreciation 0 Long Term Investments 0 Intangible Assets


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